Hurricanes and earthquakes could lead to global insured losses of USD 300 billion in a peak year
• Following the long-term annual growth trend of 5–7%, global insured natural catastrophe losses may reach USD 145 billion in 2025, mainly driven by secondary perils like severe thunderstorms, floods and wildfires
• Primary perils like hurricanes and earthquakes pose biggest risks, potentially driving insured losses to USD 300 billion or more in a peak year, according to Swiss Re Institute analysis
• Reinsurers pivotal for peak years and well capitalised to absorb large shocks with estimated global capital of USD 500 billion
2025 started with wildfires in Los Angeles, causing an estimated USD 40 billion in insured losses. While these losses from a secondary peril are substantial, primary perils remain the biggest threat: when a severe hurricane or strong earthquake hits a densely populated urban area, insured losses in that year could be more than double the long-term loss trend. Based on model analysis, Swiss Re Institute estimates that hurricanes and earthquakes could drive global insured losses to USD 300 billion or more in a peak year.
Urs Baertschi, CEO Property & Casualty Reinsurance at Swiss Re, said: "In addition to helping clients with traditional risk transfer, reinsurers also provide data, risk insights and knowledge about where dangers lie. The reinsurance industry is a shock absorber when danger materialises into disaster and an essential discussion partner around risk awareness and risk prevention."
Peak years, due to a few primary-peril events or the accumulation of both secondary-peril and primary-peril events, should not be considered an anomaly. The most recent peak year was 2017, driven by Hurricanes Harvey, Irma, and Maria. Since then, underlying risk has increased continuously with economic and population growth as well as urban sprawl, including in areas vulnerable to natural catastrophes. In addition, climate change effects are playing a role in compounding losses for some weather perils and regions.
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