Gallagher Re, the reinsurance broking and advisory firm, released its full-year Natural Catastrophe and Climate Report for 2025, reporting that global natural catastrophe losses during 2025 were largely manageable for the re/insurance sector, with total insured losses for the year estimated at USD 129 billion, which is around 5% below the average recorded between 2015 and 2024.
Losses were heavily concentrated in the United States, which accounted for USD 100 billion, or 78% of global insured losses. The most expensive event sequence for insurers occurred early in the year, with the January Los Angeles wildfires generating an estimated USD 41 billion in insured losses. Severe convective storms were responsible for at least 47% of total insured losses worldwide, equating to USD 60 billion, of which USD 51 billion was recorded in the US.
Natural catastrophe activity affected many regions globally but, overall, financial impacts remained within manageable levels. La Niña conditions prevailed for much of the year and contributed to a range of weather and climate extremes across both developed and emerging economies, many of which remain exposed to increasing hazard risk.
Direct economic losses from natural hazards are estimated at USD 296 billion. The difference between total economic and insured losses, referred to as the protection gap, stood at 56%, or USD 167 billion in 2025. At least 58 events resulted in economic losses exceeding USD 1 billion, with at least 23 of these also reaching the same threshold for insured losses.
Focusing solely on weather- and climate-related events in 2025, and excluding earthquakes and other non-atmospheric hazards, economic losses are estimated at USD 277 billion. Insurers covered around USD 125 billion of this amount. Once again, the January 2025 Los Angeles wildfires represented the largest loss sequence for insurers, at USD 41 billion.
Severe convective storms accounted for at least USD 60 billion of insured losses, or 47% of the total. Combined losses from this peril across 2023, 2024 and 2025 now total USD 208 billion globally in current dollar terms, with USD 176 billion, or 85%, occurring in the United States. As a result, severe convective storms have become a primary annual loss driver for the industry.
While aggregate figures may suggest that 2025 was a comparatively lower loss year, the report highlights that several countries experienced significant financial pressure following major disaster events. Jamaica, Myanmar, Indonesia, Sri Lanka and Pakistan were among those affected, with recovery challenges intensified by limited levels of insurance coverage.
The report notes the ongoing influence of climate change on global weather patterns and individual events, while also emphasising that this does not imply a steady or uniform increase in hazard frequency or severity across all regions or perils. Instead, greater variability at annual and regional levels is expected, which may result in higher losses and broader societal consequences.
Although more extreme event behaviour is anticipated in a growing number of cases, the report cautions against assuming that recent multi-year trends represent a permanent shift. Continued investment in adaptation, mitigation and effective public policy is described as essential.
As the industry moves into 2026, Gallagher Re describes the re/insurance market as being in a strong financial position. Following several years of manageable catastrophe losses, total capital available for deployment has reached a record USD 838 billion. The firm’s 2026 First View Report identified average reductions of between 10% and 20% in property pricing for catastrophe programmes that were not affected by losses, while pricing remained broadly stable in regions that experienced notable loss activity.
The year 2025 was also notable for being the third warmest on record, according to major global scientific agencies and datasets. It was additionally the first year since 2015 in which no hurricane made landfall on the US mainland. Other themes explored in the report include the influence of El Niño and La Niña on rapid tropical cyclone intensification, trends in weather and climate-related funding within InsurTech, and the continued growth of climate litigation.
Although headline loss figures may indicate a quieter year, report author and Gallagher Re Chief Science Officer Steve Bowen highlighted the uneven distribution of impacts, particularly in regions where a large share of losses remained uninsured. Despite the industry entering 2026 with strong capitalisation, Bowen warned against complacency.
He said: “The complexity of natural catastrophe events is accelerating the need to better understand how both physical and non-physical risk profiles are evolving and becoming increasingly interconnected.”
The report also identifies the expanding use of artificial intelligence (AI) as a key development in weather and climate forecasting. Gallagher Re expects this trend to continue through 2026 and beyond. AI-based models have improved the industry’s ability to analyse larger volumes of data, enhancing analytical capability and supporting more informed risk management decisions.
In the field of tropical cyclone forecasting, 2025 marked a significant step, with AI incorporated into official agency tools used to predict storm formation, track and intensity. While early results have shown promise, the report notes that further refinement is required to improve accuracy for factors such as precipitation and other compound drivers of storm risk.
As a result, scientists and other specialist users are expected to continue relying on a combination of next-generation AI forecasting tools and established numerical weather prediction models when assessing future weather and climate risks.
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